Microsoft Beats Google In Its Own Backyard For Key Contract

Northern California is Google’s home turf, but Microsoft just notched a big win there.

The City of San Francisco will move 23,000 employees off an old email system and on to Microsoft’s Exchange Online.

The deal was announced earlier today, and Microsoft online services director Tom Rizzo gave some more details in a phone interview.

The city is moving off an old IBM Lotus Notes email system, and apparently considered cloud-based solutions from Google and IBM, but eventually went with Microsoft.

A Google spokesperson notes that the city never put out a formal request for proposals: “We’re disappointed we didn’t have an opportunity to compete for San Francisco’s business. Through a competitive bid process, the majority of customers choose Google, and the rest get a great deal on their Microsoft licence.”

The deal covers only Exchange Online — not the other Office 365 components like SharePoint and Lync Online, and not other cloud computing services.

Rizzo acknowledges that San Francisco already had a software contract with Microsoft. Although terms of the deal weren’t disclosed, the city was probably up to renew some parts of these software licenses anyway, and Microsoft used the opportunity to add Exchange Online to the mix.

This shows how Microsoft’s pre-existing relationships with customers are a huge barrier to Google as it hopes to push Gmail and Apps into enterprise accounts.

“Flash back 10 years. I remember Larry Ellison saying the network computer is the future, no one needs PCs, no one wants to store things locally, no one wants to use native apps. People pooh-pooh the PC, but PCs are still selling well. Even if you’re relying on a mobile device, iPhone, Android phone, you’re still using native apps.”